An Innovation Slowdown at the Tech Giants

[Commentary] Something fundamental has shifted in Silicon Valley.

The emblematic event was Facebook's February acquisition of the mobile messaging startup WhatsApp for an astounding $19 billion. Facebook CEO Mark Zuckerberg has two options: radically transform his current product (no small matter with the drag of 1.3 billion users), or buy the Next Big Thing. And the next one. Then the one after that. It may prove a brilliant strategy. But it also means that Facebook, one of the most innovative companies of the past decade, now depends on purchasing the inventiveness of others.

The company isn't alone. Look around Silicon Valley and it's hard to find established companies still devising their next products in-house. Seen anything new and big lately from Cisco, Yahoo or even Twitter? Why are large tech companies losing the ability to innovate? Established companies simply aren't structured for this kind of speed. So their only choice is to buy those companies that can still innovate rapidly. It may be time to stop waiting for famous tech companies to roll out the hottest new product and start investing in startups that can sell their innovations to big companies. Tech appears to be evolving into a different kind of field: one that is, paradoxically, more static at the top but also more dependent on entrepreneurship than ever before.